Key Highlights

Double digit growth in volume in cement asbestos, panels and boards in Sep 18 quarter. Asbestos sheets saw volume growth of around 9.6% and Boards and Panels (Vnext) around 22% volume growth YoY.

The company was able to improve market share in Asbestos and in Vnext.

Not much impact of revenues due to Kerala flood and truck strikes

The margins in Sep 18 quarter looks lower compared to Sep 17. Two reasons. Sep 17 quarter margin was highest and abnormal due to GST benefits coming from low June 17 quarter. Lot of initiatives taken on ad cost, new employee, brand building, increase in freight cost and some raw material costs due to Rs deprecation and the new plant expansion costs which are present in Sep 18 quarter and not in Sep 17 quarter. Raw material price Pulp is up by more than 50% on YoY basis.

The ad cost in Sep 18 quarter is higher by Rs 3 crore as compared to Sep 17 quarter.

Asbestos margin in Sep 18 quarter stood at around 13-14% and Vnext stood at 7%. Vnext margin is after a 10% price hike taken to mitigate abnormal increase in pulp price and higher brand building and promotion expenses.

Vnext margin will be in double digits by end of FY 19. As the new Haryana plant comes in, there will be advantage of low freight costs. Further Atom plant has higher margins and better realisation which will all lead to better margins going forward.

Atom plant got commenced in end of Sep 18 while Haryana plant got delayed due to clearances. Haryana plant will commence by end of Nov 18.

Company expects further price increases in Vnext and despite Pulp and Re depreciation, margins will improve given strong volumes.

Roofing business price is flat on YoY basis. Freight cost and Re depreciation will lead to some price increase in roofing and asbestos segment

Pulp prices will continue to remain high and will not soften down in near term. However, the business projection has factored in this.

Total capacity for spinning segment is 12000 tons. In Sep 18 quarter volume was around 2900 tons. Higher margins are due to lower base of last year and segment coming up well post GST. 12% margin of spinning segment for FY 19. Expects margins to continue in FY 20 with better ROE and ROCE.

Working capital days have come down from Mar 18 of 103 days to 81 days as on Sep 18.

Net debt which was at Rs 256 crore on Mar 18 stood at Rs 216 crore in Sep 18. Interest is expected to come down further.

Increase in Rural spending will also auger well for the industry and for the company. Not seen any slowdown for the industry or for the company.

Election benefits so far is not seen.